Oil boosted by Venezuelan comments

CBS.MarketWatch.com

NEW YORK (CBS.MW) -- Crude oil futures headed toward $24 a barrel Friday as comments from Venezuela reinforced speculation that OPEC will maintain current production limits that have caused prices to more than double this year.

One day after oil hit $23 a barrel, Venezuela's energy minister reportedly said there appears to be a consensus within the Organization of Petroleum Exporting Countries to continue the cuts in oil output until the end of March 2000. The minister expects OPEC's members to do little at their next meeting on Sept. 22 in Vienna as the cartel hasn't shown any desire to alter the latest output agreement. OPEC implemented the curbs in April, after its last meeting, to end a crude oil supply glut.

On the New York Mercantile Exchange, October crude closed up 35 cents to $23.55 a barrel. October heating oil rose 0.95 cent to 62.03 cents, while October unleaded gasoline rose 0.92 cent to 69.32 cents a gallon.

Oil futures had edged lower during most of Friday's session after Venezuela's largest oil union called off a strike scheduled for Tuesday. The government reportedly agreed to restart negotiations on the union's labor contract which expires in November.

In addition to the South American news, falling U.S. petroleum supplies contributed to rising oil prices. The American Petroleum Institute said supplies of crude fell a greater-than-expected 5.97 million barrels during the week ended Sept. 3.Distillate and gasoline supplies also made unexpected moves last week. Distillates fell a surprising 224,000 barrels while API gasoline stocks rose 628,000 barrels. Inventories of distillates should be on the rise in preparation from winter demand while gasoline supplies were expected to have fallen on the last leg of the summer driving season demand.

The Department of Energy confirmed drops in supplies of crude oil and distillates with a 4.5 million barrel and 500,000 barrel decline, respectively. DOE Gasoline stocks slipped a bullish 2 million barrels.

Meanwhile, natural gas slipped as production facilities in the U.S. Gulf coast area appear to be out of danger from Hurricane Floyd.

"Traders are basically unwilling to bet that Hurricane Floyd will still be a threat by the time Monday morning rolls around," said a daily report from analysts at Thompson Global Markets.

October natural gas fell 5 cents to $2.801 per million British thermal units on the New York Mercantile Exchange.

This week, the American Gas Association said supplies of natural gas rose 66 billion cubic feet during the week ended Sept. 3. The figure was in-line with market expectations of a rise of 50 to 80 billion cubic feet.

USDA releases 1999 crop estimates

Corn futures fell after the U.S. Department of Agriculture reported greater-than-expected estimates on 1999 crop production Friday morning.

On the Chicago Board of Trade, December corn fell 1 1/4 cents to 217 3/4 cents per bushel.

The USDA pegged corn's 1999 crop production at 9.38 billion bushels, higher than average trade estimates of 9.279 billion, according to Scott Capinegro, president of Illinois-based Barrington Commodity Brokers.

Soybean production was reported at 2.778 billion bushels compared to estimates at 2.783 billion, while all wheat production was pegged at 2.306 billion bushels.

On the New York Cotton Exchange, December cotton rose 1.33 cents to 53.87 cents a pound after the USDA reported crop production at 17.53 million bales vs. estimates at 18.06 million bales.

Meanwhile, sugar futures saw losses after the USDA estimated U.S. sugar cane crop production in September at 37.1 million tons compared to 36.6 million just last month. October sugar fell 0.27 cent to 6.70 cents a pound on the Coffee, Sugar and Cocoa Exchange, while December cocoa fell $13 to $947 a ton.

Orange juice futures saw gains amid the USDA's unchanged report on crops of Florida oranges. August orange crops were pegged at 185.7 million boxes, identical to last month's, according to Bridge News. November frozen orange juice rose 1.85 cents to95.45 cents a pound on the NYCE.

In other news, coffee continued to sink on beneficial rainfall in Brazil, the top producer and exporter of coffee. December coffee fell 1.85 cents, or 2.1 percent to 85.35 cents a pound.

Metals update

Gold futures fell on the Commodities Exchange division of the New York Mercantile Exchange as the U.S. dollar gained strength against the Japanese yen, making the dollar-denominated metal more expensive to foreign investors. December gold fell 70 cents to $257.90 an ounce and December silver fell 1.5 cents to $5.225 an ounce.

Late Thursday, the Commodities Exchange said gold warehouse stocks fell 16,204 ounces to 1,031,646 ounces, while silver stocks were unchanged at 80,329,899 ounces.

December copper fell 0.50 cent to 82.85 cents a pound on COMEX. The London Metals Exchange said stocks of copper, as of early Friday, were down 1,650 tons to 780,375 tons. COMEX supplies fell 429 tons by late Thursday to total supplies of 105,101 tons.

In other metals highlights, December palladium rose 80 cents to $362.65 an ounce. October platinum rose $4.70 to $365.60 an ounce.

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